team ESETProactive threat detection company analyzed “pulling the rug”(in Spanish, “rug pull”), especially in projects def (Crypto assets based on a decentralized financial system).

Carpet stretching occurs when Developers behind the release of the project a sign And attract investors to increase their value, then suddenly pull out and take the money. When the fraudsters drained the liquidity pools, the price Crypto assets falls to zero and investors lose the opportunity to exchange tokens for more stable or legal tender tokens.

“Projects that are designed as a carpet cheat are not always obvious. Although we will find cases where the project has shown obvious signs of lying (such as promising huge profits), this is not always the case. In fact, most of the crypto assets that ended up in carpet scams were presented as solid investment projects rather than quick profit opportunities,” he says. Camilo Gutierrez Amaya, Head of ESET Latin America Research Laboratory.

According to Chainalysis, carpet stretching is the new way to go cybercrime which has grown significantly in recent years. In fact, and by 2021, They estimate that at least $2.8 billion has been stolen from victims in this pattern. is 37% of all collected by fraudsters in electronic money worldwide.

There are 3 types of scams that are defined as carpet pulling

1. Theft of liquidity, in which developers encourage victims to invest in their most stable coins or projects by creating expectations Social networks.

2. Fake investor, Where developers create a supposedly promising project that seems to have many investors, thereby attracting people with less experience. However, the creators are the owners of most of the wallets that contain these coins, which allows them to sell large amounts of assets in a short period of time.

3. project management, that Given some technical knowledge about exchanges and crypto assets, developers can prevent investors from selling assets without prior notice. After the price increase cryptocurrencyDevelopers exchange all coins and disappear with investors’ money.

How to avoid being a victim of carpet ripping

ESET shares the following recommendations to avoid becoming a victim of this little-known scam, but it is practiced in many countries around the world:

1. Find out who created the project

It is important to know the history of the founders. Aside from ditching any cryptocurrency that has terrible founders behind it, it’s better Avoid any project that does not have a strong project history.

2. Beware of promises that are too good to be true

To attract a large number of investors, some projects may promise a very high return on investment.

If they give a guarantee 5 or 10 times more profitability than the initial investment, This is usually a red signal. They can hire celebrities and influencers to promote the scam.

3. Fluctuations in crypto value

Although a rise in the price of the cryptocurrency you are investing in is beneficial for investors, if the spike is too high, it may indicate a production boom where project developers They increase this price to attract investors with attractive offers.

After this boom, the developers can disappear with the assets or sell them to get back the investors’ money. For example, An alarming fluctuation will be a hundredfold increase in the value of the currency.

4. Backups

Investing in projects supported by continuous testing and code review is essential. Also, the support of famous figures in the world of cryptocurrencies is a good sign.

5. Liquidity project

The ability to exchange project assets for other, more stable cryptocurrencies is a good indicator of project strength, but it is not the only one.

This can be verified Monitoring the availability of liquidity funds.

Continue reading